Panel’s new head has broad perspective

Incoming Takeovers Panel president
Kathleen Farrell
warns against “cherry-picking" reforms from foreign jurisdictions, such as the UK’s “put up or shut up" rule, unless they work as an effective part of the whole regime in Australia.

The rule is a prominent feature of the British takeovers regime, preventing target companies from having to endure a drawn-out takeover process from a less than entirely publicly committed bidder, but it is yet to gain universal support in Australia.

Farrell acknowledges the rule is of interest to some in the business community, but says the debate still “has got a little way to go". The rule tends to be more relevant for schemes of ­arrangement than takeovers, she says, and the corporate law already provides ways of making bidders commit to what they say.

“One of the things that I do get concerned about is when we look to other jurisdictions and say ‘they have got one of those things and it looks like something really interesting for us’; cherry-picking can be dangerous," she says.

“If we want to look at how the whole scheme works, then that is a healthy thing to do, from time to time. But just taking individual elements out of what the panel in England does . . . without looking at the whole scheme" is a different matter.

Farrell has been a member of the panel since 2001 and will become president on September 1, ending a 10-year reign by Macquarie’s Simon McKeon that has spanned the entire life of the panel.

“Leadership always matters," Farrell says, and she hopes to be as ­successful as McKeon in helping to “set the tone for the panel".

But the panel’s greatest strength is the real-world experience its 54-odd members bring, she says, along with an ability to be flexible enough to handle a diverse range of cases.

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“The things that come before the panel and the changing nature of the people who are part of the panel is ultimately the most determinative thing," she says. “Keeping a group of people who are interested, expert and engaged is really important."

Farrell herself brings a long history of commercial experience to the role. She was a mergers and acquisitions partner at Freehills all through the 1980s and 1990s, until she switched to a consultancy role in 2000. In that time she advised Christopher Skase’s Qintex on the acquisition of Seven Network, the NSW government on the privatisation and float of TAB, and Mayne Group on the float of Cable & Wireless Optus.

She has also sat on the other side of the fence, having held a number of board positions, and is now a ­director of the Australian Institute of Management (NSW and ACT).

Farrell has been involved in law ­reform as the chair of the business law section of the Law Council of Australia and represented the LCA on the ASX Corporate Governance Council. But her stint as the national co-ordinator for enforcement at the Australian Securities Commission (now the Australian Securities and Investments Commission) in 1992 and 1993 exposed her to some of the more colourful aspects of corporate wheeling and dealing. She ran the prosecution of the infamous Alan Bond “during the recession for commercial activity but [in] prime time for corporate law enforcement".

More recently, as a Freehills consultant, Farrell has been working on governance, including acting for Citi on its defence of ASIC’s insider trading and complex management case. She says the panel’s work has helped make advisers and companies focus on whether a particular proposal “fits in with the spirit of Chapter 6 [of the Corporations Act] and not just the detail provisions of it".

The threat remains that the panel’s authority may be subjected to a constitutional or administrative law challenge, but Farrell says the High Court’s decision in Alinta and broad political support are encouraging.

“Australians like litigating so it’s possible," she says. “As to whether or not it is probable is a different issue. If it’s in someone’s commercial interest, they will try."

Farrell expects the outcome of the federal election to have little impact on the panel, which has “enjoyed support from all sides of parliament".

“I really believe in the panel," she says. “It has done some good work and I hope it gets the opportunity to continue to do some good work."